Markets at Risk— Current and Future Challenges in a Managed Care Marketplace. D. Provider cooperation.

12/01/2000

The expectation that shifting more financial risk to organizations of providers would reduce intrusiveness, respond to provider desires to maintain autonomy, and enable providers to purse their own reconfigurations seems to have met with very mixed success. The uneven track record probably reflects many factors: maturity of provider groups, relationships between physicians and hospitals, adequacy of payments, and potential for further reductions in utilization whose benefits would accrue to provider organizations. Looming over this experience has been some notable and painful failures of certain provider-sponsored risk bearing entities. Adding this to physician discomfort with the capitation-based incentives to withhold care, one might expect continuing pushback toward fee-for-service payments in PPO-type products. It is also likely that as utilization levels in general have declined and cost shifting has been reduced, savings potential from economies in care delivery have been lessened to the point where risk-bearing by providers has little opportunity for upside gain. Emerging from this resurgence of fee-for-service payment will be rising physician concern about the adequacy of the levels of payments, rather than mode or method payment. This will probably provoke more concerted efforts among physicians to create stronger vehicles for collective bargaining over rates with health plans.